IDEAS home Printed from https://ideas.repec.org/p/hhs/osloec/2002_006.html
   My bibliography  Save this paper

The Duration and Outcome of Unemployment Spells- The role of Economic Incentives

Author

Listed:
  • Røed, Knut

    (The Ragnar Frisch Centre for Economic Research)

  • Zhang, Tao

    (Dept. of Economics, University of Oslo)

Abstract

We investigate how transitions from unemployment are affected by economic incentives and spell duration. Based on unique Norwegian register data that exhibit the rarity of random-assignment-like variation in economic incentives, the causal parameters are identified without reliance on distributional assumptions or functional form restrictions. We find that the hazard rates are negatively affected by the replacement ratio, but that the size of these effects varies considerably among individuals. There is strong negative duration dependence in the employment hazard and positive duration dependence in the ‘discouragement’ hazard. The employment hazard rises substantially in the months just prior to benefit exhaustion.

Suggested Citation

  • Røed, Knut & Zhang, Tao, 2003. "The Duration and Outcome of Unemployment Spells- The role of Economic Incentives," Memorandum 06/2002, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2002_006
    as

    Download full text from publisher

    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2002/Memo-06-2002.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
    2. van den Berg, Gerard J, 1990. "Search Behaviour, Transitions to Nonparticipation and the Duration of Unemployment," Economic Journal, Royal Economic Society, vol. 100(402), pages 842-865, September.
    3. Brinch,C., 2000. "Identification of structural duration dependence and unobserved heterogeneity with time-varying," Memorandum 20/2000, Oslo University, Department of Economics.
    4. Olivier Jean Blanchard & Peter Diamond, 1994. "Ranking, Unemployment Duration, and Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 417-434.
    5. Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366.
    6. Bo E. Honoré, 1993. "Identification Results for Duration Models with Multiple Spells," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(1), pages 241-246.
    7. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February.
    8. Gerard J. van den Berg, 1990. "Nonstationarity in Job Search Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 255-277.
    9. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460, Elsevier.
    10. Hunt, Jennifer, 1995. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 88-120, January.
    11. Hujer, Reinhard & Schneider, Hilmar, 1989. "The analysis of labor market mobility using panel data," European Economic Review, Elsevier, vol. 33(2-3), pages 530-536, March.
    12. van den Berg, Gerard J & van Ours, Jan C, 1996. "Unemployment Dynamics and Duration Dependence," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 100-125, January.
    13. Groot, Wim, 1990. "The effects of benefits and duration dependence on re-employment probabilities," Economics Letters, Elsevier, vol. 32(4), pages 371-376, April.
    14. Arulampalam, Wiji & Stewart, Mark B, 1995. "The Determinants of Individual Unemployment Durations in an Era of High Unemployment," Economic Journal, Royal Economic Society, vol. 105(429), pages 321-332, March.
    15. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-956, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roed, Knut & Zhang, Tao, 2005. "Unemployment duration and economic incentives--a quasi random-assignment approach," European Economic Review, Elsevier, vol. 49(7), pages 1799-1825, October.
    2. Knut Roed & Tao Zhang, 2003. "Does Unemployment Compensation Affect Unemployment Duration?," Economic Journal, Royal Economic Society, vol. 113(484), pages 190-206, January.
    3. Røed, Knut & Jensen, Peter & Thoursie, Anna, 2002. "Unemployment Duration, Incentives and Institutions - A Micro-Econometric Analysis Based on Scandinavian Data," Working Paper Series 3/2002, Stockholm University, Swedish Institute for Social Research.
    4. Roed, Knut & Nordberg, Morten, 2003. "Temporary layoffs and the duration of unemployment," Labour Economics, Elsevier, vol. 10(3), pages 381-398, June.
    5. repec:eee:labchp:v:3:y:1999:i:pc:p:3085-3139 is not listed on IDEAS
    6. Roed,K. & Zhang,T., 1999. "Unemployment duration in a non-stationary macroeconomic environment," Memorandum 14/1999, Oslo University, Department of Economics.
    7. Alba, Alfonso & Arranz, José M. & Muñoz-Bullón, Fernando, 2006. "Unemployment duration, unemployment benefits and recalls," DEE - Working Papers. Business Economics. WB wb066218, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    8. Richard Layte & Tim Callan, 2001. "Unemployment, Welfare Benefits and the Financial Incentive to Work," The Economic and Social Review, Economic and Social Studies, vol. 32(2), pages 103-129.
    9. van den Berg, Gerard J. & van der Klaauw, Bas, 2001. "Combining micro and macro unemployment duration data," Journal of Econometrics, Elsevier, vol. 102(2), pages 271-309, June.
    10. Andrey Launov & Klaus Wälde, 2013. "Estimating Incentive And Welfare Effects Of Nonstationary Unemployment Benefits," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(4), pages 1159-1198, November.
    11. José Mª Arranz & Juan Muro, 2004. "An extra time duration model with application to unemployment duration under benefits in Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 171(4), pages 133-156, december.
    12. Aysit Tansel & H. Mehmet Taşçı, 2010. "Hazard Analysis of Unemployment Duration by Gender in a Developing Country: The Case of Turkey," LABOUR, CEIS, vol. 24(4), pages 501-530, December.
    13. Paul Frijters & Bas van der Klaauw, 2006. "Job Search with Nonparticipation," Economic Journal, Royal Economic Society, vol. 116(508), pages 45-83, January.
    14. Abbring, Jaap H. & van den Berg, Gerard J. & van Ours, Jan C., 2002. "The anatomy of unemployment dynamics," European Economic Review, Elsevier, vol. 46(10), pages 1785-1824, December.
    15. Kupets, Olga, 2006. "Determinants of unemployment duration in Ukraine," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 228-247, June.
    16. Røed, Knut & Westlie, Lars, 2007. "Unemployment Insurance in Welfare States: Soft Constraints and Mild Sanctions," Memorandum 13/2007, Oslo University, Department of Economics.
    17. Roed,K. & Zhang,T., 2000. "Labour market transitions and economic incentives," Memorandum 15/2000, Oslo University, Department of Economics.
    18. Jouko Verho, 2005. "Unemployment Duration and Business Cycles in Finland," Working Papers 214, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    19. Rafael Lalive & Jan Van Ours & Josef Zweimuller, 2006. "How Changes in Financial Incentives Affect the Duration of Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(4), pages 1009-1038.
    20. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460, Elsevier.
    21. Kalwij, Adriaan, 2001. "Individuals' Unemployment Experiences: Heterogeneity and Business Cycle Effects," IZA Discussion Papers 370, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Competing risks; unemployment duration; random assignment;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:osloec:2002_006. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mari Strønstad Øverås (email available below). General contact details of provider: https://edirc.repec.org/data/souiono.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.